Russia finishes year by strengthening its position on the world stage, and its currency is allocated on the General background of leading world economies and successfully resists the power of the dollar.
The ruble is the only major currency in the world, rising against the dollar since the end of September and ahead of their competitor performance. It strengthened more than 21%, and today the dollar has allowed 60,48 of the ruble.
The rise in oil prices, combined with hopes for a thaw in relations between Russia and the West under President Donald trump ruble strengthens, increases the yield of ruble assets and contributes to the inflow of capital from abroad, which raises the prices of Russian stocks and bonds.
The main stock index Russia MICEX rose this year by 24%, despite sanctions; and Russian investment funds, monitors the organization EPFR, fix the biggest capital inflow since the first quarter of 2015, leading to a decrease in the cost of borrowings for companies and the state.
Nates SOC (Nafez Zouk) from Oxford Economics, shares his view on the ruble. Because the underlying interest rates in Russia are kept at around 10% (much higher than in developed countries), oil prices are relatively stable, and trump and Putin publicly speak of a desire for positive convergence, there is every reason to believe that the trend towards the strengthening of the ruble will continue in the coming year.
“The increasing difference in interest rate and events that contribute to the normalization of the balance of payments, will help to strengthen the ruble,” — he said.
Credit analysts noted that although the Russian currency has strengthened, a starting point is very low, as Russia had not yet recovered from the downturn caused by the sharp decline in oil prices and sanctions imposed by the US and the EU against Moscow after the annexation in 2014, the Ukrainian Crimean Peninsula.
Analysts are also concerned that the growth of Russian assets due primarily to external factors.
Inflation is close to six percent, which means that the price increase eats up the income and savings, while announced plans for structural reforms to lift the economy and reduce dependence on raw materials have not yet been implemented.
“The impressive performance of the ruble is due mainly to the rise in oil prices,” said Peter, Mates of the “Rabobank”. He fears that this may create its own problems.
“Excessive strengthening of the Russian currency could weaken the competitiveness of Russian exporters, which they have made after 2014,” the analyst notes.
The strengthening of the ruble also goes against the active sale of financial instruments in emerging markets in connection with the November presidential elections in the United States, as investors worried about the prospect of protectionist trade policies in America and the rise of American assets due to the increase in rates.
After the election has intensified the process of withdrawal of funds from investment and bond funds in emerging markets. At the same time, in us funds it’s about $ 65 billion, as investors bet on domestic economic growth, which will stimulate the new Republican government.